Note: this press release contains unaudited condensed consolidated
half-year accounts prepared under IFRS which were reviewed by the Audit
Committee on 12 February 2014 and approved by the Board of Directors of
Eutelsat Communications on 13 February 2014.
Preliminary note: as the acquisition of Satmex was closed on 1
January 2014, all figures provided do not include the impact of the
acquisition, unless otherwise specified.
The Board of Directors of Eutelsat Communications (Paris:ETL) (ISIN:
FR0010221234 - Euronext Paris: ETL) has approved the financial results
for the half-year ended 31 December 2013.
1 EBITDA is defined as operating income before
depreciation and amortisation, impairments and other operating
income/(expenses)2 Includes US$228
million for the acquisition of EUTELSAT 172A and related assets3
Includes -€16 million relating to the disposal of Solaris Mobile Ltd.
and €43.8 million for the acquisition of 9.9% of Satmex equity 4
€537.3 million transferred to an escrow account at 31 December 2013 for
the acquisition of the remaining 90.1% of Satmex but treated as cash in
the net debt calculation
Commenting on the half year 2013-2014 results, Michel de Rosen, Chairman
and CEO of Eutelsat Communications, said:
"Eutelsat delivered first half results in line with our full-year
objectives, with above 3% revenue growth (at constant currency excluding
non-recurring revenues) and a high level of operating profitability,
with a 77.4% EBITDA margin. The order backlog of €5.3 billion continues
to provide good visibility.
In Video Applications, our main neighbourhoods saw good channel
growth demonstrating a positive underlying trend. The performance of
this activity in the first half reflects a lack of available capacity,
which will be addressed with future fleet deployments, and the impact of
the suspension of operations on certain frequencies at 28.5° East. The
performance of Data was more than offset by the growing contribution
from Value-Added Services which is benefiting from our new commercial
impetus. Multi-usage revenues held up well thanks to the integration of
EUTELSAT 172 A and new contracts.
The acquisition of Satmex was closed on 1 January 2014, its financing
secured with a successful €930 million 6-year bond issue in December.
With Satmex, we are significantly upscaling in Latin America to add to
our strong presence in other fast-growing markets.
Our deployment plan for the remainder of the current and coming two
years will bring additional capacity that will principally serve video
markets in the fastest growing regions, notably Latin America, Russia,
the Middle East and Africa.
Our standalone financial objectives for the current and following two
years are confirmed and our mid-term growth potential will be enhanced
by the integration of Satmex."
Note: Unless otherwise stated, all growth indicators or
comparisons are made against the previous half year ended 31 December
2012. The share of each application as a percentage of total revenues is
calculated excluding "other revenues" and "non-recurring revenues".
Revenues by business application (in millions of euros)
Group revenues rose 2.2% in the first half 2013-2014 to €647 million
(+3.1% at a constant euro-US$ exchange rate). Excluding non-recurring
revenues and at constant exchange rate, growth was 3.1%.
Second quarter revenues (excluding non-recurring revenues) stood at
€323.7 million up 1.4% (+2.1% on a constant currency basis).
VIDEO APPLICATIONS (68.2% of revenues)
Revenues from Video Applications were stable at €430.5
million, reflecting a high fill-rate at key video neighbourhoods and a
shortage of incremental capacity. The impact of the suspension of
operations on certain frequencies at the 28.5° East orbital position
since 4 October 2013 was offset by good dynamic at video neighbourhoods
serving broadcasters in fast-growing markets, notably at 16° East
(addressing Central Europe, Indian Ocean Islands, sub-Saharan Africa)
and 36° East (addressing Russia and sub-Saharan Africa). Capacity sales
at the 7°/8° West neighbourhood (addressing the Middle East and North
Africa) also benefited from resources added with the redeployment in
mid-September of EUTELSAT 8 West C (formerly HOT BIRD 13A) to this
A number of contracts announced during first half reflect sustained
demand in video markets:
Good channel growth at Eutelsat's main video neighbourhoods demonstrates
the positive underlying trend in the Group's main application. At 31
December 2013, the total number of channels broadcast by Eutelsat
satellites stood at 4,807, up 7% (+322 channels) year-on-year
despite the impact of the suspension of operations on the previously
disputed frequencies at 28.5° East (-170 channels). Growth was
particularly dynamic at 7°/8° West (+17%, or +107 channels), 16° East
(+26%, or +153 channels), 7° East (+42%, or +91 channels) and 36° East
(+14%, or +103 channels).
HDTV take-up across the fleet continued to accelerate. At
end-December 2013, 508 of the channels broadcast by Eutelsat satellites
were in HD, up from 398, implying an HD penetration rate of 10.6%
compared to 8.9% at 31 December 2012.
As of 31 December 2013, some 240 channels were broadcasting through
Including Satmex, the Group's fleet now broadcasts more than 5,000
DATA and VALUE-ADDED SERVICES (20.1% of revenues)
Data and Value-Added Services revenues amounted to €127 million
Despite the integration of EUTELSAT 172A into the fleet
(acquisition closed on 25 September 2012), Data Services revenues
declined by 10.5% to €83.8 million, reflecting:
Demand remains strong for this application, notably in Africa and
especially for corporate networks. During the last quarter, contracts
were signed with PPC (formerly Philips Projects Centre) one of the
leading providers of integrated IT services in Nigeria for capacity on
the EUTELSAT 10A satellite and with UltiSat, a global provider of
turnkey communication solutions, for C-band capacity on the EUTELSAT 5
West A satellite. Actions are ongoing to accelerate the ramp-up of
available data capacity on other satellites, notably EUTELSAT 21B and
Value-Added Services revenues amounted to €43.2 million, up 38.4%.
Broadband services on KA-SAT performed well, reflecting the continuing
positive market response to the expanded distribution network and
intensified sales and marketing efforts. Around 124,000 terminals
were activated at 31 December 2013 (from 108,000 at 30 September 2013
and 91,000 at 30 June 2013).
Mobile connectivity services for the maritime market, notably through
WINS, also contributed to year-on-year revenue growth in Value-Added
MULTI-USAGE (11.7% of revenues)
Revenues from Multi-usage services stood at €73.6 million,
up 1.2%. The negative carry forward effect of the February/March 2013
and September/October 2013 renewal campaigns were offset by the
integration of EUTELSAT 172A into the fleet, new contracts and the
reclassification from Data Services described above. Ahead of the
February/March 2014 renewal campaign, Eutelsat remains cautious on the
evolution of revenues for this application.
OTHER AND NON-RECURRING REVENUES
Other revenues stood at €15.8 million (€5.4 million in the first
half 2012-2013). They mainly include compensation paid on the settlement
of business-related litigation, the financing of certain research
programmes by the European Union and other organisations, and the
recognition of EUR/USD foreign exchange gains/losses.
Non-recurring revenues stood at €0.5 million.
BACKLOG AT €5.3 BILLION (94% VIDEO)
The backlog represents future revenues from capacity lease agreements
and can include contracts for satellites not yet in operation.
The backlog stood at €5.3 billion at 31 December 2013, down 0.9%
compared to 30 June 2013. The backlog represents a weighted average
residual life of contracts of 7.1 years, and is equivalent to 4.1 times
The backlog of Satmex at 31 December 2013 amounted to US$0.42 billion
(US$0.22 billion at 31 December 2012).
Backlog key indicators (excluding Satmex):
30 June 2013
30 September 2013
31 December 2013
OPERATIONAL AND LEASED TRANSPONDERS
At 31 December 2013, the number of operational transponders on
Eutelsat's fleet of 31 satellites stood at 855, compared to 858 as of 30
June 2013: the addition of transponders on EUTELSAT 25B (operational on
29 October 2013) and EUTELSAT 8 West C was offset by the switch-off of
certain transponders on EUTELSAT 28A as of 4 October 2013.
The fill rate stood at 74.8% at 31 December 2013, compared to 75.2% at
30 September 2013 and 74.0% at 30 June 2013.
At 31 December 2013, the Satmex 6 and Satmex 8 satellites had an 85%
Fleet evolution (excluding Satmex):
* Includes 82 KA-SAT spots as transponder equivalents. Fill rate
considered at 100% when 70% of capacity is taken up.
HIGH OPERATING PROFITABILITY MAINTAINED
EBITDA remained high, representing a margin of 77.4%
Group EBITDA remained stable at €501.3 million. The 77.4 % margin (79.2%
at 31 December 2012) is in line with the full-year objective.
Operating expenses amounted to €146.1 million, up 10.9%, mainly
reflecting the increased resources allocated to the development of
commercial activity and an unfavourable basis of comparison, as
operating expenses were back-end loaded in the 2012-2013 financial year.
Group share of net income: €147.3 million, net margin at 22.8%
Group share of net income stood at €147.3 million, down 17.5%.
These elements are partially compensated by:
Extract from the consolidated income statement (in millions of
5 Comprises amortisation expense of €23.3 million for H1
2013-2014 (€22.8 million for H1 2012-2013) corresponding to the
intangible asset "Customer Contracts and Relationships".
NET CASH FLOWS FROM OPERATING ACTIVITIES
Net cash flows from operating activities amounted to €325.1 million
(50% of revenues)
The Group recorded €325 million of net cash flows from operating
activities, representing 50% of revenues. The decrease compared to the
previous year (-€82 million) mainly reflects:
Capital expenditures amounted to €176 million for H1 2013-2014. This
includes €148 million for the acquisition of satellites, other property
and equipment and intangible assets, €44 million for the acquisition of
9.9% of Satmex equity and a €16 million inflow related to the disposal
of Solaris Mobile Ltd. As a reminder, as of 31 December 2012, capital
expenditures stood at €389 million, including US$228 million for the
acquisition of EUTELSAT172A and related assets.
Financing: successful new 6-year bond issuance
In December 2013, Eutelsat S.A. successfully issued 6-year senior
unsecured bonds maturing in January 2020, for a total of €930 million
and bearing a 2.625 percent coupon. The Company was able to take
advantage of a very favourable market environment to raise long-term
financing at attractive conditions. The transaction was well received by
a diversified investor base and was significantly oversubscribed,
demonstrating the market's confidence in Eutelsat's long-term business
model. The bonds enabled Eutelsat to cover financing requirements in
connection with the acquisition of Satmex.
With the new financing in place, the average maturity of the Group's
indebtedness now reaches 4.8 years.
At 31 December 2013, net debt stood at €2,7946 million
(€2,613 million at 31 December 2012). The net debt to EBITDA ratio for
the first half was 2.8x. On a proforma basis, taking into account the
acquisition of Satmex, the ratio would stand at 3.3x7. At 31
December 2012 and 30 June 2013, the ratio was 2.7x.
The average cost of debt drawn by the Group was 3.70% (after hedging) in
the first six months of the 2013-2014 fiscal year.
Net debt to EBITDA ratio
OUTLOOK FOR FISCAL YEAR 2013-2014 AND TWO FOLLOWING YEARS
Standalone outlook (excluding the impact of the acquisition of Satmex)
Despite the impact of the outcome of the dispute at 28°5 East and the
launch delay of the Express-AT1 and Express-AT2 satellites, Eutelsat
confirms its financial outlook:
The outlook for the current year assumes no further delays in the launch
of Express-AT1 and Express-AT2, no further deterioration in Data
Services and a satisfactory outcome of the February/March 2014 renewal
campaign for the Multi-usage application.
Consolidated outlook (including the impact of the acquisition of
Satmex will add around US$70 million to Eutelsat's revenues for FY
2013-2014. Satmex will continue to grow high single digit in the
Including Satmex, Eutelsat's EBITDA margin is expected at around 76.5%
for FY 2013-2014. Future growth, as well as the benefits of its
integration into Eutelsat, should benefit Satmex's EBITDA margin in the
Including the procurement of Satmex 7 and Satmex 9, average consolidated
investments should stand at around €600 million for the three fiscal
years to June 2016.
The group will maintain a sound financial structure to support its
investment grade rating. Over the long term it aims at a net debt/EBITDA
The Group remains committed to sharing its profits with its shareholders
over the fiscal years 2013-2016, with a pay-out ratio of 65% to 75% of
Group share of net Income.
FLEET DEPLOYMENT PLAN UPDATE
Launch of EUTELSAT 25B, redeployments of EUTELSAT 25C and EUTELSAT 33A
EUTELSAT 25B, a joint venture satellite with Es'hailSat from Qatar, went
into commercial service on 29 October 2013 at 25.5° East, enabling
Eutelsat to redeploy EUTELSAT 25C to 33° East in November 2013 under the
name EUTELSAT 33B.
Following an agreement with Türksat, the Turkish satellite operator,
EUTELSAT 33A will be redeployed in May 2014 from 33° East to 31° East
where it will be operated by Türksat under its satellite network filings.
Other satellite redeployments
With the entry into service of EUTELSAT 3D at 3° East, EUTELSAT 3C was
redeployed in early July to the HOT BIRD position at 13° East. Renamed
HOT BIRD 13D, it is now collocated with the identical HOT BIRD 13B and C
satellites. They together span the entire range of 102 Ku-band
frequencies at 13° East and deliver broadcast customers industry-leading
levels of security and 100% in-orbit redundancy.
This reconfiguration enabled the HOT BIRD 13A satellite to be deployed
to 7°/8° West under the name EUTELSAT 8 West C. In January 2014, the
satellite experienced an anomaly to an onboard power transmission
assembly. As the electrical power produced by the other onboard assembly
remains well above the level required by the overall satellite platform
for its current mission, it is fully expected that the satellite will
continue to deliver nominal service to clients.
In October 2013, EUTELSAT 4B was de-orbited after reaching the end of
its operational life.
Estimated launch schedule (satellites generally enter into service
one to two months after launch for chemical propulsion satellites and
six to eight months after launch for electric propulsion satellites.)
The launch of Express-AT1 and Express-AT2 was initially expected for Q4
2013. It is now expected for March 2014.
1 Partnership satellites with RSCC. For Express-AT1
& AT2, transponders indicated for Eutelsat portion only2
When launched to 3° East, EUTELSAT 3B will release EUTELSAT 3D to 7° East
Closing of the Satmex acquisition
On 1 January 2014 Eutelsat closed the transaction to acquire 100% of the
share capital of Satélites Mexicanos, S.A. de C.V. ("Satmex") having
obtained all required government and regulatory approvals. The
transaction amounts to an aggregate of US$831.0 million and covers 100%
of the share capital, as well as transaction-related costs.
Satmex will be consolidated in the accounts of Eutelsat Communications
from 1 January 2014.
With this acquisition, Eutelsat is significantly upscaling activity in
Latin America to complement its strong presence in fast-growing markets.
Based in Mexico, Satmex operates three satellites at contiguous
positions, 113° West (Satmex 6), 114.9° West (Satmex 5) and 116.8° West
(Satmex 8) that cover 90% of the population of the Americas. The Satmex
7 and 9 satellites that are scheduled for launch in 2015 will more than
double this total in-orbit capacity. It will be further complemented by
the EUTELSAT 65 West A satellite that is expected for launch in the
first-half of 2016 to serve video and broadband markets in Latin America.
Settlement of the dispute with SES concerning the 28.5° East orbital
On 29 January 2014, Eutelsat and SES concluded a series of agreements
including a comprehensive settlement of legal proceedings concerning the
right to operate at the 28.5° East orbital position and containing
long-term commercial as well as frequency coordination elements.
The first agreement ends the arbitral procedure between Eutelsat and SES
that was initiated in October 2012 under the rules of the International
Chamber of Commerce (ICC) in Paris. The dispute concerned a right of use
of 500 MHz spectrum at the 28.5° East orbital position. Eutelsat ceased
to operate this spectrum on 3 October 2013 and SES has operated this
spectrum since that date. The dispute over this right of use has now
been resolved, with SES continuing to operate its satellites at this
location and Eutelsat independently commercialising part of the capacity
of the previously disputed frequencies.
According to the second agreement between both companies, Eutelsat has
therefore contracted long-term satellite capacity on the SES satellite
fleet at the 28.5° East orbital position. Eutelsat will commercialise
over Europe on the SES fleet 125 MHz (eight transponders) of the
formerly disputed 500 MHz. Eutelsat will also commercialise on the SES
fleet the 250 MHz (12 transponders) which was not the subject of the
The third agreement between the two companies addresses technical
frequency coordination under the rules of the International
Telecommunication Union (ITU). It will allow both parties an optimised
use of their respective spectrum at a number of orbital positions over
Europe, the Middle East and Africa. It confirms and clarifies in
technical terms the geographic coverage and transmission power levels
for frequencies at these positions.
Following the settlement of this dispute, Eutelsat estimates the impact
on revenues for its fiscal year 2013-2014 at approximately -5 million
euros. There will be no impact on revenues in the two following years.
At its meeting of 16 September 2013, the Board of Eutelsat
Communications was informed by its Chairman, Jean-Martin Folz, that in
order to respect corporate governance recommendations on multiple
directorships by the Afep-Medef he would not seek to renew his mandate
which was to expire at the General Assembly of Shareholders of 7
November 2013. To enable the Board to immediately appoint a successor
and to avoid uncertainty during a period of transition, Jean-Martin Folz
resigned as Chairman. The board expressed its appreciation for
Jean-Martin Folz's contribution to the strategic directions pursued by
the Group over the last two years.
Noting that the recent developments of Eutelsat and the reorganisation
of shareholders no longer justified the separation of the roles of
Chairman and CEO, the Board decided to merge the two functions,
reverting to the practice in place from 2004 to 2009. The Board
subsequently unanimously decided to appoint Michel de Rosen, who has
been CEO since 2009, as Chairman and CEO.
The Ordinary and Extraordinary Annual General Meeting of Shareholders of
Eutelsat Communications was held on 7 November 2013 in Paris under the
chairmanship of Michel de Rosen, Chairman and CEO. The resolutions
The mandate of Jean-Martin Folz which expired at the General Assembly on
7 November 2013 was not renewed. The total number of directors now
stands at nine, of which five are independent.
Following the departure of Thomas Devedjian from Bpifrance
Participations in February 2014, Jean d'Arthuys has become Bpifrance
Participations' permanent representative at Eutelsat Communications'
Board of Directors.
* * *
Consolidated accounts are available at http://www.eutelsat.com/investors/index.html
Results presentation for Analysts and Investors
Eutelsat Communications will hold an analysts and investors meeting in
English on Friday 14 February 2014 to present its financial
results for the half year 2013-2014. The meeting will take place at
Group headquarters, 70 rue Balard, 75015 Paris, starting at 9am Paris
time (welcome coffee at 8:30 am).
The presentation can also be accessed live via the following numbers:
Access code: 940797#
A replay of the call will be available from 14 February at 3pm (Paris
time) to 28 February midnight (Paris time), by dialling:
There will also be a webcast live from the home page of the Investor
Relations section at www.eutelsat.com
The financial calendar below is provided for information purposes
only. It is subject to change and will be regularly updated.
About Eutelsat Communications
Established in 1977, Eutelsat Communications (Euronext Paris: ETL, ISIN
code: FR0010221234) is one of the world's leading and most experienced
operators of communications satellites. The company provides capacity on
34 satellites to clients that include broadcasters and broadcasting
associations, pay-TV operators, video, data and Internet service
providers, enterprises and government agencies. Eutelsat's satellites
provide ubiquitous coverage of Europe, the Middle East, Africa,
Asia-Pacific and the Americas, enabling video, data, broadband and
government communications to be established irrespective of a user's
location. Headquartered in Paris, with offices and teleports around the
globe, Eutelsat represents a workforce of 1,000 men and women from 32
countries who are experts in their fields and work with clients to
deliver the highest quality of service. For more about Eutelsat please
Quarterly revenues by business application (in millions of
Change in net debt (in millions of euros)
Capex per financial outlook definition (in millions of euros)
Channels at video neighbourhoods serving Central and Eastern
Europe, Russia, Middle East, Africa
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